Bank of Botswana (BoB) Governor, Linah Mohohlo on Thursday hit out at the local banking industry for failing to deliver to expectations despite wide ranging reforms instituted by government to liberalise the financial sector, in a bid to improve the quality of products and services.
Speaking at the official opening of the Barclays head office on Thursday, Mohohlo expressed disappointment that an increase in the number of players in Botswana’s banking industry failed to revitalise the inter-bank money market, which continues to underperform and function perversely.
Mohohlo also slammed the local banking industry for failing to deliver quality services commensurate with increased competition and technological advances. She revealed that a recent consumer survey identified banks as being among institutions that don’t enjoy the wholehearted trust of the public.
“Banks need to take proactive steps to correct this trust deficit if the integrity of the country’s banking system is to be maintained,” she said.
On interest rates, Mohohlo expressed grave concern at disparities between lending and deposit interest rates, saying they are very large when compared with those of peer countries. She said such a glaring spread suggests that either productivity gains have not been maximized or the benefit is not fairly shared with customers.
“The wide spreads have also slowed the pace of financial inclusion as the attractiveness of borrowing and lending products is diminished,” she said.
Mohohlo urged Barclays, as the largest and oldest commercial bank in Botswana, to be at the forefront of fulfilling the on-going agenda of reforming Botswana’s financial sector. She cautioned Barclays to avail opportunities and scope for qualified and experienced Batswana to be appointed to senior positions within the bank. She also cautioned the bank not to use the regional branding resulting from its merger with ABSA, and the subsequent deployment of Batswana and staff from other nationalities, to marginalise local board members and senior management.
“Routine referral of business decisions to South Africa impedes timely and proactive service delivery, which could affect efficiency and competitiveness. This is not a matter of national pride, but business efficiency,” said Moholho.
The governor also urged the Barclays group to allow the local board to align its policies to Botswana’s business environment and market conditions. She also urged Barclays to take the lead in correcting inefficiencies in customer service delivery and local banks’ interactions with one another.
It is not the first time that local banks have come under fire from government authorities. Former Vice President Ponatshego Kedikilwe also lashed out at banks last year, saying their service falls far short of the exorbitant charges they levy on customers. He also cautioned that high charges will impede financial inclusion and discourage saving. Kedikilwe also urged banks to produce products and services that are targeted at the unbanked population to promote broad-based participation in economic activity.
“It is important for banks to adhere to the Bankers’ Code of Conduct, which emphasises transparency in banking tariffs, truth-in-lending and fair trading practices,” he said.